Interested chapter 11 plan investors, beware. A recent decision by the United States Court of Appeals for the Ninth Circuit held that even after the chapter 11 plan has been confirmed and substantially consummated and your money has been invested, an appeal can go forward even if a victory for the appellants would change the chapter 11 plan terms on which you relied and substantially diminish the value of your investment.

A series of related decisions issued by the United States Bankruptcy Court for the Southern District of New York in the ongoing Fairfield Sentry U.S. redeemer litigation — Fairfield Sentry II,¹Fairfield Sentry III,² and Fairfield Sentry IV³ — provide insight into, among other things, the interplay between the safe harbor provision of section 546(e)⁴ of the Bankruptcy Code (the “Safe Harbor”) and chapter 15.

Introduction

The United States District Court for the District of Delaware recently affirmed a Delaware bankruptcy court case that held that the mutuality requirement of section 553(a)¹The case declined to find mutuality in a triangular setoff between the debtor, a parent entity that owed the debtor money, and that entity’s subsidiary, which was a creditor.²

When a court reaches a decision in a case, the law of the case doctrine generally provides that parties should not be able to relitigate the same issue in that case, and for the court to adhere to its prior decision.1 The doctrine does not, however, apply to every decision a court reaches. Two recent decisions by Judge Elizabeth Stong in the Brizinova chapter 7 cases in the Bankruptcy Court for the Eastern District of New York explore when the doctrine may or may not apply in bankruptcy cases.

The Bankruptcy Code’s cramdown provisions are a powerful tool for debtors in the plan confirmation process. Pursuant to section 1129(a)(10) of the Bankruptcy Code, a plan may be confirmed if, among other things, “at least one class of claims that is impaired under the plan has accepted the plan.” Once there is an impaired accepting class, and assuming certain requirements are met, the plan may then be “crammed down” on all other classes of impaired creditors that reject the plan and those creditors will be bound by the terms of a plan they rejected.

LBOs can get messy. Such was the case for the Tribune Company, which, in conjunction with its private equity investor, borrowed approximately $10.7 billion in 2007 to finance its buyout. Soon after the LBO was completed, Tribune experienced financial difficulties that made it unable to service its new debt, and, in December 2008, the company filed for chapter 11 protection.

Section 1104(a)(2) of the Bankruptcy Code provides for the appointment of a chapter 11 trustee “if such appointment is in the interests of the creditors, any equity security holders, and other interests of the estate . . . .” While it is not often that we see a court displace management pursuant to section 1104(a)(2), it does happen on occasion. One such recent case is In re China Fishery Group Limited. Case No. 16-11895 (Bankr. S.D.N.Y. Oct. 28. 2016), where Judge James L. Garrity, Jr.

A decision from the United States Supreme Court penned by Justice Sonia Sotomayor adopted a broad reading of “actual fraud” in section 523(a)(2)(A) of the Bankruptcy Code, which excepts from discharge debts “obtained by . . .

A recent decision from the United States Bankruptcy Court for the Western District of Texas caught our eye because of the unconventional opening line:

“Summers are hot in Texas, so pools are a hot item. But not hot enough to help a pool installer [ . . . ] avoid bankruptcy” – Judge Tony M. Davis, United States Bankruptcy Judge.